Richard Turrin, author of 'Cashless,' highlights the gap between the hype and reality of banks' exploration of Generative AI's potential.
In recent years, the buzz around Generative AI (GenAI) has been immense, with many predicting it will revolutionise the financial services industry. However, the reality seems to be quite different. According to the State of GenAI in Global Financial Institutions report by BCG, only 18% of global financial institutions have a well-defined strategy for GenAI. This raises important questions: why are banks slow in adopting this technology, and what is causing the disconnect between GenAI's hype and its actual implementation?
Further data shows that banks are moving cautiously. Only 2% have a fully developed GenAI talent strategy, and just 26% are committing significant portions of their innovation budgets toward GenAI implementation. Yet, there are exceptions, like Bunq, a digital bank with over 11 million users in Europe, which launched its GenAI-powered chatbot, Finn, aimed at enhancing user experience by answering financial life questions.
To better understand this gap and explore how prepared banks really are for innovation, we’ve invited Richard Turrin, author of Cashless, to discuss the reality behind GenAI’s role in banking and whether financial institutions are truly ready for the future.
We began by revisiting our previous conversation from two years ago on Central Bank Digital Currencies (CBDCs), highlighting the evolving global landscape. Some countries, like Brazil and China, are leading with ambitious CBDC projects, while others, such as the US, are debating legislative measures to outlaw them altogether. Richard Turrin has a comprehensive piece on China's CBDC (e-CNY), where he explores its potential beyond retail payments, including its role in disrupting the dollar’s dominance in the oil trade. As Richard points out, the benefits of CBDCs are clear, but they require further exploration to fully unlock their potential.
Richard explains the distinctions between general AI and generative AI, emphasising that despite the current hype, banks have been using AI for years, notably for fraud detection. ‘I used to sell these technologies in 2018 when I worked at IBM’, Richard recalls, adding humorously, ‘I always joke that Watson of 2018 seems pretty stupid compared to what OpenAI can do now’. Despite the advancements, Richard notes that while there’s excitement, banks remain cautious, as they bear the risks of penalties and fines if AI makes errors—not the AI providers or consultants selling the solutions.
When discussing the slow adoption of AI by banks, Richard highlights, ‘If a bank’s AI gives a wrong answer, it's the bank that pays the fines, not the AI provider or the consulting firm pushing the technology’. He adds that while there is real value in AI, much of the current push from AI vendors is driven by hype. ‘AI providers and consultants make it sound like this future is right around the corner, but for banks, their biggest asset is trust’, Richard stresses.
We also delved into the specific use cases of AI in banking, such as enhancing productivity and preventing fraud. However, significant challenges remain, including a shortage of skilled talent and unclear regulatory frameworks. Richard also touches on broader concerns, such as AI's impact on energy consumption, the economy, and society at large, urging for thoughtful consideration as banks integrate these technologies.
We hope you enjoy our interview and join the ongoing discussion on the future of AI in banking!
About Richard ‘Rich’ Turrin
Best-Selling Author, Fintech, Innovation, and AI Consultant
Rich Turrin is the international best-selling author of ‘Cashless - China’s Digital Currency Revolution’ and ‘Innovation Lab Excellence’. He is the No 4 fintech influencer worldwide on the prestigious Onalytica listing and an award-winning executive previously heading fintech teams at IBM following a twenty-year career in investment banking. Living in Shanghai for the last decade, Rich experienced China going cashless first-hand.
To read more of Rich’s latest writings visit his newsletter richturrin.substack.com.
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